Archives for February 2011

The Madoff/Wilpon Mess: A Simple Guide

By Howard Megdal | February 7, 2011 at 10:22am CDT

Maybe you're wondering: why do I need to follow the lawsuit by Irving Picard, trustee for Bernie Madoff victims, against Fred Wilpon and his business partners, who own the New York Mets? Regardless of the outcome, will Luis Castillo hit any better? Will Oliver Perez pitch any better? Will Johan Santana heal any better?

The answer to all three questions is, sadly, no. But the ramifications of the suit, unsealed last Friday, will impact the way the Mets are run for years to come, whether Fred Wilpon is forced to take on a minority owner, sell the entire team, or spend the upcoming months (and possibly years) in litigation.

The Mets' ownership group is being sued for $300MM in fictitious profits, along with another $700MM in damages, for their connection to the Ponzi scheme operated by Bernie Madoff. The impact on the franchise is likely to be immense. Here's what you need to know about the current circumstances:

Fred and Jeff Wilpon said late last month that they would sell 20-25% of the team to guard against any potential Madoff settlement. Since then, settlement talks have broken down, leading to the unsealing of the lawsuit last week.
Picard is seeking $300MM in fictitious profits from Wilpon and his business partners. In addition, Picard seeks an unspecificied amount beyond that (the New York Times reports it "could reach beyond $1 billion") alleging that Wilpon should have known or suspected Madoff's scheme.
The standard by which Picard arrived at the $300MM is pretty common in these cases- fictitious profits are distributed to those who lost money in Ponzi schemes, scams where new backers are consistently recruited to pay off old investors. For the Wilpons to incur losses above $300MM, Picard's standard will be to prove that a "reasonable man" would have suspected something was amiss regarding Madoff's scheme, and alleges numerous instances of the Fred Wilpon and his partner/brother-in-law Saul Katz receiving warnings from both business partners and Katz's own son.
It isn't clear how Wilpon would raise anything approaching even the initial $300MM from a minority sale of the Mets. Forbes valued the team at $845MM in April 2010, but Wilpon has borrowed heavily against the team. Forbes reported this week that the combined book value of the Mets and Citi Field, including debt, is negative $225MM, though Adam Rubin of ESPN New York has cast doubt on that figure. That was before the Mets were named specifically in Picard's suit, giving the team even more potential liability.
Even if someone would pay a premium to own the Mets outright, it is far less clear that someone will pay that same premium for a minority stake and no authority. In other words, a 25 percent stake in the Mets is worth $211.25MM as per April 2010, absent any of the debt or other mitigating factors, and assuming that a 25 percent stake (minority) is actually worth one quarter of 100 percent stake (majority). (It isn't.) Obviously, with all the mitigating factors, 25 percent of the Mets isn't worth close to $211.25MM – which is, itself, far less than the $300MM Picard is likeliest to recover.
SNY is enormously profitable, and would earn a decent amount in a straight sale. However, Wilpon and his partners have borrowed against SNY as well, diluting the value. And far more ominously, the New York Post reported this week that any proceeds from a sale of SNY would be distributed to those lenders. In other words, when Jeff Wilpon described SNY as wholly separate from any sale of the Mets last Friday, he may not have been making a choice.
At the end of the day, no one knows what the maximum amount of money Fred Wilpon and his partners can raise without selling a majority stake in the New York Mets. But there is a number, X, and as long as Picard's settlement would be higher than X, Wilpon will face the choice between fighting in court and losing his team.
It may well be that there is a certain amount of money Wilpon needs to raise to avoid bankruptcy, even including a full sale of the team. If we call that Y, and Picard's settlement would be higher than Y, Wilpon has even greater reason to fight this in court, hoping a judge sees things his way.
Either way, the longer Wilpon doesn't settle, the likelier it is that one of these two scenarios has come to pass. The results would be disastrous for the New York Mets. With cases such as these often taking a year or more, Mets ownership could be in the midst of this battle next November, just as Albert Pujols and Jose Reyes are scheduled to hit free agency.

MLBTR At FanGraphs: The Next $100MM Players

By Ben Nicholson-Smith | February 7, 2011 at 9:25am CDT

I'm writing a series of guest posts at FanGraphs, one of the first places baseball fans go for top analysis and stats. Today, I look ahead to the next crop of $100MM players and conclude that Albert Pujols and Adrian Gonzalez are far from the only ones with a shot at signing nine-figure contracts in the near future.

Olney On Pujols Negotiations

By Ben Nicholson-Smith | February 7, 2011 at 8:53am CDT

Now that the Super Bowl is over, the countdown can really begin. Spring Training is just days away, but that's not the countdown in question. The Cardinals have to lock Albert Pujols up by Spring Training or bid for him on the open market after the season and as ESPN.com's Buster Olney writes, contract talks are “not moving at all.”

Pujols appears to be pursuing a "Mt. Everest" contract whether it's in St. Louis or elsewhere. Other clubs – Olney names the Angels, Dodgers and Mets as examples – could re-brand themselves by signing Pujols, arguably the game's best player.

But it's too early to assume that Pujols is hitting the open market. Talks haven't been going well for a few days, but as we saw with negotiations between Derek Jeter and the Yankees, teams and players can make progress in a hurry.

Players Who Cannot Be Offered Arbitration

By Tim Dierkes | February 6, 2011 at 9:55pm CDT

Last offseason, agents negotiated four contracts known to include the bonus of prohibiting the team from offering arbitration if the player received Type A status. Aside from Orlando Hudson, none of the four came close to Type A (Hudson was a B). In general, none of the 14 Type As who were offered arbitration in November saw their market adversely affected, though Jason Frasor and Frank Francisco played it safe and accepted. It was thought that Grant Balfour might have a hard time finding a deal, but the Athletics inked him for two years and $8.1MM.

Three contracts signed this winter prevent the team from offering arbitration if the player is a Type A at the end of the term:

Javier Vazquez, ACES. The Yankees may have been counting on snagging a draft pick upon Vazquez's departure, but he slipped to Type B with a lousy 2010. If Vazquez pushes himself back to A status with a strong season for the Marlins, they won't be able to offer arbitration.
Kevin Correia, Lapa/Leventhal. This agency snagged the "no arbitration offer" clause for Justin Duchscherer last offseason as well. Correia signed a two-year deal with the Pirates, so this clause applies to the 2012-13 offseason. More importantly, Correia has a million bucks in incentives for '12.
Carl Pavano, O'Connell Sports Management. As a Type B after the '09 season, Pavano accepted the Twins' arbitration offer and took the one-year deal. He moved up to a Type A this winter, and the draft pick cost possibly did give a few teams pause. After the '12 season, Pavano will not be saddled with that cost.
The contract was negotiated six years ago, but Scott Boras client Carlos Beltran can't be offered arbitration after '11. Beltran was pretty close to Type A for 2009-10 despite playing in only 145 games over that span. Given his $18.5MM salary the arbitration offer question is probably moot for the Mets anyway.

Quick Hits: Diamondbacks, Guerrero, Marcum, Pence

By Luke Adams 2 | February 6, 2011 at 8:49pm CDT

Football will dominate today's sports headlines, but ESPN.com's Jayson Stark tweets some good news for baseball fans – Super Sunday also represents the start of the last week without baseball until November! Here are today's links, as the Packers and Steelers prepare to square off in Texas….

The Diamondbacks could hit it big in the draft this year, a rival scout tells Nick Piecoro of The Arizona Republic. Arizona will hold the No. 3 and No. 7 picks this June.
It's time to give Peter Angelos and the Orioles credit for signing Vladimir Guerrero, writes Kevin Cowherd of The Baltimore Sun. The big ticket signing is the latest move made by the O's who will see their payroll jump from $73MM in 2010 to $93MM in 2011.
Francisco Liriano's $4.3MM salary could impact the Brewers' negotiations with Shaun Marcum, writes MLB.com's Adam McCalvy. Both pitchers submitted a $5MM figure. Milwaukee countered with $3MM while the Twins offered Liriano $3.6MM before settling on a $4.3MM mark last week.
An arbitration hearing for Hunter Pence and the Astros has been set for February 18th, reports Stephen Goff of the Houston Astros Examiner. As MLBTR's Arbitration Tracker shows, Pence is Houston's last remaining case, and the two sides' figures are $1.75MM apart.
Within a piece on the Rays' bullpen, Roger Mooney of the Tampa Tribune writes that the team is waiting until early this week to make roster moves to free room on the 40-man roster for Johnny Damon and Manny Ramirez.
The Yankees' hunt for starting pitching and the Mets' financial issues will get more attention, but Joel Sherman of the New York Post thinks the more intriguing stories in New York involve the futures of the two starting shortstops.
John Fay of the Cincinnati Enquirer previews some storylines and poses some questions for the Reds as they prepare for the season.

MLBTR Originals

By Zachary Links | February 6, 2011 at 6:29pm CDT

Here at MLBTradeRumors, we're about a lot more than supplying you with up-to-the-minute hot stove news. Here's a look back at some of our original work this week..

We asked our readers to vote on which team offered Vladimir Guerrero $8MM, how the 2011 Rays will fare, and Justin Duchscherer's next team. More than half of you guessed correctly, saying that Duchscherer would wind up in Baltimore.
This season will be a "Make Or Break Year" for Dodgers reliever Jonathan Broxton and Bucs catcher Ryan Doumit.
Fifteen players have signed guaranteed one-year contracts worth less than a million bucks this winter and Mike Axisa introduced us to the six-figure contract club.
Check out our latest installments of "This Date In Transactions History".
Unclear about what's considered in arbitration cases? Here's what matters in arbitration and what does not.
We took a look around the blogosphere in Friday's edition of Baseball Blogs Weigh In.
I feel rather svelte after reading Howard Megdal's Jack Of All Trades: Baseball's Roundest.
Now you can subscribe to MLBTR on your Amazon Kindle for just $1.99 per month. How cool is that?
Ben Nicholson-Smith examined ten well-paid arb eligible players. And if you need even more Ben in your life (who doesn't?) check out his series of guest posts over at Fangraphs.
We covered a lot of ground in this week's chat. If you missed any part of it, you can take a look at the transcript here.
With just weeks to go until pitchers and catchers report, we ran down the twenty biggest free agent deals of the offseason.

Week In Review: 1/30/11 – 2/5/11

By Steve Adams | February 6, 2011 at 5:03pm CDT

As the NFL season comes to an end, the MLB season is fast approaching. Let's take a look at the last week's worth of late offseason action:

Congratulations to Andy Pettitte on a terrific career. After 16 Major League seasons, the southpaw is calling it a career. The Yankees were prepared to pay him $12MM, but Pettitte will take his 3.88 ERA and spend time with his family instead. Here's some media reactions to his retirement. Good luck in life after baseball Andy.
The Orioles made a pair of signings this week, adding Vladimir Guerrero for one year and $8MM (with $2MM deferred) and Justin Duchscherer for one year and $700K plus incentives. They won't take the division, but the O's have made some serious upgrades to their on-field product this offseason.
There's not much time before the deadline to work out an extension with Albert Pujols, but talks between him and the Cardinals are not going well at this point. One positive note for Cards fans is that Jim Edmonds will return for his ninth season as a Cardinal with an eye on 400 career homers.
The White Sox announced a four-year, $32.5MM extension for Alexei Ramirez this week. On the other side of town, the Cubs are nearing an extension of their own with Carlos Marmol.
Colorado extended Rafael Betancourt's contract by one year, guaranteeing their setup man another $4MM. The deal also has a mutual option for $4.25MM.
The Michael Young saga continues. The Rangers are once again exploring trades for him, and here's everything we learned about the situation on Saturday. Earlier today, we heard that Young wants out of Texas.
The Indians are working to sign Kevin Millwood and Jeremy Bonderman as well. Cleveland could use some depth in the rotation beyond Fausto Carmona, though the Yankees are also talking to Millwood. The Tigers announced this week that Bonderman won't be back.
The Giants made some personnel decisions this week, exercising the options on manager Bruce Bochy and GM Brian Sabean. They also hired Lou Piniella as a front office consultant.
Notable arbitration news for the week included the Twins and Francisco Liriano settling on a $4.3MM salary, the Dodgers and Hong-Chih Kuo settling on a $2.725MM salary, the Reds and Edinson Volquez settling on a $1.625MM salary, and the Mets hammering out a two-year, $7.5MM deal for R.A. Dickey.
Robinson Cano hired Scott Boras as his agent this week — that should be entertaining when the two sides discuss a new contract.
Notable minor league deals included the Red Sox signing Dennys Reyes, the Rays signing Juan Cruz, the Yankees signing Eric Chavez plus Freddy Garcia, and the White Sox signing Lastings Milledge. For all of the week's minor moves, check our Transactions section.

Michael Young Wants Out Of Texas

By Steve Adams | February 6, 2011 at 3:08pm CDT

After hearing his name in countless trade rumors and seeing his infield position filled by Adrian Beltre, Michael Young has "grown disillusioned with his diminished role" on the Rangers and wants out of Texas, according to Yahoo's Tim Brown. According to Brown, Texas has told Young that they will push to trade him in the coming days.

The Rockies and Angels remain the primary potential destinations for Young. Any trade would have to include salary relief, as he's owed $48MM over the next three years. Young would likely slot in as the everyday second baseman in Colorado or the everyday third baseman in LA, though Texas would probably prefer to avoid dealing him within the division. We heard yesterday that Jose Lopez would be a part of Colorado's latest offer.

Young's name originally hit the trade rumor circuit back at the Winter Meetings when he was first connected to the Rockies. The longtime Ranger has a lifetime .300/.347/.448 slash line and has played second base, shortstop, and third base regularly at various points throughout his career.

Million Dollar Minor League Deals

By Steve Adams | February 6, 2011 at 2:55pm CDT

Last night, MLBTR's Mike Axisa took a look at a list of fifteen players who have signed Major League deals this offseason but failed to secure themselves a guarantee of $1MM. While we don't have the exact figures on all minor league signings, it's interesting to see that so far nine players have signed minor league deals with larger guarantees should they make their club's Major League roster, as shown on MLBTR's Transaction Tracker:

Joe Beimel: $1.75MM with the Pirates
Freddy Garcia: $1.5MM with the Yankees
Andrew Miller: $1.3MM with the Red Sox
Felipe Lopez: $1MM with the Rays
Dave Bush: $1MM with the Rangers
Braden Looper: $1MM with the Cubs
Jeff Suppan: $1MM with the Giants
Jason Giambi: $1MM with the Rockies
Jose Veras: $1MM with the Pirates

Some interesting takeaways from this list:

The largest minor league contract this season so far was given out to a left-handed reliever. This is Beimel's fourth career minor league deal, according to Cot's Baseball Contracts.
Three of the players — Bush, Looper, and Suppan — were all members of the same Brewers' rotation in 2009. The trio combined for 470 2/3 innings of 5.53 ERA ball.
While the move was praised at the time, Boston's plan to acquire Lopez in the hopes of obtaining a supplemental draft pick for him didn't pan out because he signed a minor league deal.

Like the list of six-figure Major League guarantees, this could and likely will grow as Spring Training approaches. Remember too that each of these deals includes incentives to carry them beyond their base. Garcia, for example, could earn up to $5.1MM if he pitches a full, effective season in the Bronx.

The list serves as an interesting reminder that while minor league deals are often times an afterthought, they can still provide lucrative paydays if the recipient performs well.

Indians Notes: LaPorta, Sizemore, Rotation, Chisenhall

By Steve Adams | February 6, 2011 at 2:15pm CDT

Even on a day filled with football news, Paul Hoynes of the Cleveland Plain Dealer has a pair of Indians articles up filled with some information on what we can expect from the Tribe in 2011. Let's look at some highlights:

The upcoming season will play a large role in gauging the return that the Indians got from the C.C. Sabathia trade. Both Matt LaPorta and Michael Brantley are expected to play full seasons as part of Cleveland's rebuilding efforts. LaPorta, who recently turned 26, is fully healthy unlike 2010 when he underwent two mid-season surgeries.
Both Grady Sizemore and Fausto Carmona could be traded if they perform well in the first half. Sizemore is more likely, given that he's only under Cleveland's control through 2012 (the $8.5MM club option on his deal becomes a player option if he's traded). Carmona is through 2014 through a series of club options.
The club is still interested in both Kevin Millwood and Jeremy Bonderman, though Hoynes says the Indians haven't changed their stance on Millwood's asking price; they don't want to invest $4MM-$5MM.
Lonnie Chisenhall will open the season at Triple-A Columbus no matter what, according to Hoynes. He has a chance to push some current big-leaguers eventually, as do Jason Kipnis, Jared Goedert, and Cord Phelps. Keith Law recently ranked Chisenhall as the game's 39th best prospect. Kipnis placed 56th.

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